SEC Greenlights In-Kind Redemptions for Bitcoin and Ethereum ETFs
The U.S. Securities and Exchange Commission has approved a groundbreaking change permitting in-kind creations and redemptions for Bitcoin and Ethereum exchange-traded funds (ETFs). This marks the first significant crypto-friendly policy shift under the new SEC Chairman, Paul Atkins.
The approval signifies that authorized participants can now create and redeem ETF shares using actual cryptocurrency assets rather than cash. This brings crypto ETFs in line with traditional commodity-based funds. The change is anticipated to:
- Reduce costs
- Improve efficiency
- Provide better tax advantages for institutional investors
“It’s a new day at the SEC,” said Chairman Atkins. “A key priority of my chairmanship is developing a fit-for-purpose regulatory framework for crypto asset markets.”
This decision marks a significant departure from the previous cash-only redemption model that had been in place since the launch of spot crypto ETFs. The timing aligns with strong institutional interest in crypto ETFs, with Ethereum ETFs recording net inflows for 18 consecutive days.
Industry experts believe this regulatory change could accelerate growth and attract new institutional investors who had been cautious about operational constraints under the previous framework.